--- title: "The Window is Open: Why Community Banks Can, and Should, Own the Corner on Fintech." description: Community banks have the opportunity to thrive in the fintech space by adopting digital solutions that enhance growth, profits, and customer relationships. Now is the time to act. image: https://blog.datacenterinc.com/hubfs/dci%20blog%209.26_9.26-03.png --- [![White DCI Logo.](https://blog.datacenterinc.com/hubfs/white-dci.svg "White DCI Logo.")](https://www.datacenterinc.com) - [Who We Serve](https://www.datacenterinc.com/who-we-serve) Who We Serve [Banks 60+ years of bankers serving bankers](https://www.datacenterinc.com/who-we-serve/banks) [De Novos Solutions designed to enable success](https://www.datacenterinc.com/who-we-serve/de-novos) [Credit Unions A member-centric approach to finance](https://www.datacenterinc.com/who-we-serve/credit-unions) [Digital Branches A Fintech entity for a digital lifestyle](https://www.datacenterinc.com/who-we-serve/digital-branches) [Sponsor Banks Breakthrough collaborations for growth](https://www.datacenterinc.com/who-we-serve/sponsor-banks) - [Solutions](https://www.datacenterinc.com/solutions) Solutions [Core Processing Meet iCore360](https://www.datacenterinc.com/solutions/core-processing) [Digital Banking Meet iCoreGO](https://www.datacenterinc.com/solutions/digital-banking) [Fintech Processing Face the Fintech future with confidence](https://www.datacenterinc.com/solutions/fintech-processing) - [Who We Are](https://www.datacenterinc.com/who-we-are) Who We Are [Why DCI? 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That time is now. We’ve done the research and we’ve seen the success stories. Fintech occupies an interesting position in today’s community banking landscape. The market is developing rapidly, yet finding a core provider with the infrastructure to help your bank navigate these developments can prove difficult. Implementing new digital solutions involves risks, and the available industry education is often more confusing than clarifying. Yet at the same time, the numbers are clear: the ROI is more than worth it. Those who *do* keep up are on the cutting edge of the future of banking. Now, more than ever, opportunities abound. As of a 2025 year-end review by [Bankers Helping Bankers (BHB)](https://bankershelpingbankers.com/), there are over 703 Fintech brands competing for charter banks. According to the same report, just 157 institutions are taking them up on the offer. That leaves plenty of room for community banks to get in on the ground floor, and all the incentive to do it.   **How Should My Bank Incorporate Fintech?** What does embracing the latest in mobile-first services look like, and how can your institution cash in? For community banks that want to compete and thrive independently, involvement falls under one of three categories: - **Sponsor Banking** - **What is it?** A branded, customer-facing product (apps, cards, loans) backed by an existing bank. TheFintech vendor handles the output, the bank provides the infrastructure. This is targeted towards loyal customer bases.   - **What’s in it for your bank?** Banks see more profit with less direct credit risk. Retail consumption benefits sponsor banks. Existing commercial relationships with repeat buyers and consistent spenders funnel into added revenue, in exchange for support from a bank’s expertise, FDIC insurance, and BSA/AML. Active sponsor banks experience a 4.3 x average fee income growth compared to inactive peers.   - **Names you know:** Target Circle Card, Square Capital - **Direct Digital Banking** - **What is it?** A licensed, insured financial institution without geographical restrictions. Digital banking blows the ceiling off of your market, allowing community banks to serve customers nationwide. The most successful digital banks operate under the same principles as successful community banks: by targeting niche audiences and becoming experts on how best to serve them.   - **What’s in it for your bank?** The acquisition costs of operating a digital bank are 60-80% lower than those of a brick-and-mortar branch, increasing the margins of profitability. Direct digital banking opens the door for infinite growth without constraints.   - **Names you know:** Chime, So-Fi **Embedded Finance** - **What is it?** A third-party banking service provided through a non-banking platform, requiring a licensed, FDIC-insured bank partner. Your bank powers online financial services, the Fintech vendor acquires customers and provides a user interface.   - **What’s in it for your bank?** Banks earn net interest income, fees, and interchange without touching acquisition or management. Embedded finance allows community banks to support BaaS products without geographic expansion or added client pressure.   - **Names you know:** Stripe Treasury, Klarna   **Why is Direct Fintech Integration Important?** There is reasonable hesitancy for many community banks looking to break into Fintech. In an industry that relies almost entirely on data security and customer support, introducing third-party applications into the mix can be nerve-wracking. That’s why DCI works with bank partners to directly connect to our core, cutting out unnecessary costs and communication blunders. DCI works with [Open API (Application Program Interfaces)](https://datacenterinc.com/resources/open-apis-benefits-development-and-what-to-look-for-in-your-community-banks-host) [\[1\]](https://blog.datacenterinc.com/the-window-is-open-why-community-banks-can-and-should-own-the-corner-on-fintech#_msocom_1) [\[2\]](https://blog.datacenterinc.com/the-window-is-open-why-community-banks-can-and-should-own-the-corner-on-fintech#_msocom_2) [\[3\]](https://blog.datacenterinc.com/the-window-is-open-why-community-banks-can-and-should-own-the-corner-on-fintech#_msocom_3) technology to serve as a straight path between third-party applications and our bank partners. Our core infrastructure is built for agility, which means that we’re well-equipped to support our partners in today’s arc toward digital banking. Our approach, enabled by core technology built for scalability, ensures continuity and gapless support. **Middleware platforms** are a common stepping stone between banks and Fintech solutions, offering a bridge between legacy core systems and the cutting edge. By connecting your institution with digital solutions through a middleware, you offload data translation, security enforcement, and request routing – but at the same time, you take on a layer of needless complication and risk. Middleware requires banks to sacrifice control over client data, creating cracks that could compromise security. It comes with its own set of rules, adding hurdles to what can already be an intimidating integration process. Partnering with a middleware vendor makes your bank that much more vulnerable when consent orders and compliance breaches rear their heads. Why take that risk when your core provider can do it all? At DCI, our infrastructure is designed to progress alongside our bank partners. We believe that the real legacy isn’t just in how long your core provider can keep you in a contract, but in their ability to offer you the best in banking. Our open API technology acts as a “universal adaptor,” according to DCI President and CEO Sarah Fankhauser, connecting your bank directly to DCI’s core eliminating the need for a middleware partner. Not only does this simplify integration for community banks and minimize risk, it also appeals to the third-parties looking to connect. Fintech vendors want to partner with banks who offer: - **Digital-first infrastructure** - **Licensure and FDIC insurance** - **Compliant, secure data systems** - **A healthy appetite for growth** - **Risk management solutions** - **Reliable, progressive core partnerships** Partnering with DCI ensures all of that, making *your* bank the perfect charter. The best part? Integrating Fintech through DCI doesn't require a full conversion to our core. If you’re not a current DCI partner, you can work with us in the capacity that fits your needs through a sidecar core integration. Building a sidecar core simply means DCI provisions an instance of iCore360 to supply the services you need for a Fintech Sponsor Bank relationship or the launch of a Digital Bank brand. You only pay for the services you need without all of the unnecessary add-ons and you can do this independent of your existing core provider with no middleware required. An additional upside to the sidecar core approach, is that it grows and scales with your institution by allowing you the ability to add more than one Fintech Sponsor Bank relationship or multiple Digital Bank brands all within one instance of our iCore360 platform. DCI partitions off individual branches within iCore360 for each program you create allowing them to be fully customized to your needs or the Fintech's needs. Whether DCI is your traditional core or a purpose-built sidecar core, you receive the same seamless integration and high-grade support either way.   **Why is Now the Time for Community Banks to Partner with Fintechs?** The pressure for community banks to be acquired is constantly mounting, but as the industry pushes toward consolidation *everyone* seems to miss out. Fewer banking options leads to less innovation and less competitive pricing. Credit decisions become outsourced and algorithmic, making the odds more difficult for lenders. Large core providers gather a monopoly, leaving banks without the autonomy of playing the field to find out what works best for their institution. Progress is halted while mergers go through logistical hiccups. Communities take the hit. That’s exactly why the advent of these mobile services should be seen as an opportunity. Fintech is not a threat to community banks – it’s the catalyst to innovation and collaboration. While platforms like Chime and Cash App are scaling at lightning speed, community banks offer the relational edge that no corporate BaaS vendor can claim. Trust. Relationships spanning decades. Reliable, compliant systems. Community banks may not compete with the top players in financial technology yet, but they *can* become the spine behind the next big thing. Community banks serve the underserved, owning the niche in agriculture, medicine, and the trades. Digital banking tools offer opportunities to leverage this, allowing banks to maintain independence with a competitive edge. Embedded finance, direct digital banking, and sponsor banking are growth paths that can set your institution apart and ahead without losing its mission.   **What’s the Takeaway?** DCI believes that community banks should benefit from the latest in banking technology instead of drowning in it. Digital-first startups are rampant, and they are looking to build relationships with the right bank partners. Now, with nearly 100 community banks getting absorbed by larger institutions annually, it’s especially valuable to both preserve local banking and to usher it into the future, supported and secure. Whenever your institution is ready to explore Fintech-friendly infrastructure, DCI's iCore360 is built to grow alongside you – not just at renewal. [Learn more](https://www.datacenterinc.com/solutions/fintech-processing)   ---     Share this [Share on Twitter](https://twitter.com/share?url=https://blog.datacenterinc.com/the-window-is-open-why-community-banks-can-and-should-own-the-corner-on-fintech&text=The%20Window%20is%20Open:%20Why%20Community%20Banks%20Can,%20and%20Should,%20Own%20the%20Corner%20on%20Fintech.) 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